June 20, 2002 by Canadian Underwriter
U.S. president George Bush called on Congress to act swiftly in packaging legislation that would allow for the passing of a single terrorism insurance bill guaranteeing government and insurance industry coverage for businesses against catastrophic terrorist attacks.
This call came on the heels of the Senate’s unanimous approval of the Terrorism Insurance Act (S 2600) this past Tuesday. The Republican-led House approved a terrorism insurance bill last November which was stalled going forward due to Democratic resistance over specific conditions of the legislation. With the Senate (which has a Democratic majority) having passed S 2600, the two pieces of legislation now go before a Congressional conference committee to hone a single federal bill to go before the president. "The House passed one [piece of legislation]. The Senate passed one. They need to get it to conferenceAnd they need to get it to my desk as quickly as possiblethe bill has got to make sure that insurance companies remain engaged in covering terrorism losses, that the government will help, but not help all the way," Bush says.
Bush emphasized that passing legislation to ensure businesses have access to terrorism cover had become critical. He notes that, since the tragic events of September 11, lenders have turned down billions of dollars in construction business due terrorism insurance not being available. The White House reports that 45 states have now allowed insurers to exclude coverage for acts of terrorism. Specifically, Bush refers to an example where a developer was unable to secure financing for a US$2 billion construction project as the banks were unwilling to commit capital without insurance support against potential terrorism related losses. The project would have generated 16,000 job, Bush observes. The fight against terrorism includes protecting the U.S. economy, he adds.
Several risk and insurance industry bodies have responded positively to the Senate’s approval of S 2600. Commenting on the future course for both the Senate and House terrorism insurance pieces of legislation, the Risk and Insurance Management Society Inc. (RIMS) vice president of communications & external affairs says, "we are hopeful that the [Congress] conference committee will quickly complete the work that it has to do and will send this legislation to president Bush for his signature". The National Association of Independent Insurers (NAII) also commended the Senate for its action, noting that S 2600 contains an all-important "company deductible clause" which had previously been contested ensuring fair competition between large and smaller insurance companies in their exposures to terrorism risks. "We will work to make certain that any legislation retains an effective per-company deductible and to ensure the continued participation in the marketplace by insurers of all sizes," says NAII’s director of government relations, Julie Gackenbach. The Council of Insurance Agents and Brokers’ (CIAB) president Ken Crerar adds, "the council commends the Senate for completing the hard work needed to craft legislation taking us one step closer to a federal backstop for insurance coverage of terrorist acts".